There are good reasons behind the above “bright line” rules. Most claims-made policies require that the Insured provide the insurer with “immediate” notice of any claim and at least “prompt” notice of potential claims. See Bellefonte Insurance Company v. Eli D. Albert, P.C., et al, 99 A.D.2d 947, 472 N.Y.S.2d 635 (1st Dept. 1984). These requirements are usually “conditions precedent” to coverage.
Most claims-made policies require that notice of a claim or potential claim be provided to the insurer “as soon as practicable”(1) after an occurrence. It was well-settled that “as soon as practicable” generally equates to the provision of notice within a reasonable time under all the facts and circumstances of each case. See Heydt v. American Home Assurance, 146 A.D.2d 497, 498, 536 N.Y.S.2d 770, 772 (1st Dept.1989) lv. dismissed 74 N.Y.2d 651, 542 N.Y.S.2d 520, 540 N.E.2d 715. The reasoning behind the prompt notification requirement is to afford the insurer the opportunity to protect itself, i.e., “to protect itself from fraud by investigating claims soon after the underlying events; to set reserves; and to take an active, early role in settlement discussions.” See Brandon v. Nationwide Mutual Insurance Co., 97 N.Y.2d at 496, 743 N.Y.S.2d at 56, 769 N.E.2d 810.
An Insured’s delay or failure to give timely notice might be excusable where the Insured had a “reasonable” belief that he or she would not be liable for the subject claim. See Paramount Insurance Co. v. Rosedale Gardens, Inc., 293 A.D.2d 235, 239, 743 N.Y.S.2d 59, 62 (1st Dept. 2002). The burden of showing the reasonableness of the excuse, however, is on the Insured. See White v. City of New York, 81 N.Y.2d 955, 598 N.Y.S.2d 759, 615 N.E.2d 216 (1993). Questions as to whether a good-faith belief exists that an injured party will not seek to hold the Insured liable and whether the belief is “reasonable” under the circumstances are questions of fact reserved for the fact finder. See Argentina v. Otsego Mutual Fire Insurance Co., 86 N.Y.2d 748, 750, 631 N.Y.S.2d 125, 126, 655 N.E.2d 166, 167 (1995).